Worldwide News Ltd, a foreign company based in the United States, issued a prospectus in Australia which it offered ordinary shares to theAustralian public.The purpose of the issue was to finance the expansion of the company into television broadcasting.The prospectus statedthatthecompanywasanapplicantforanewtelevisionbroadcastinglicenceand,if granted, thecompany claimed therewouldbesubstantialearningsarisingfromthisnew business venture.The prospectus included a report from an auditor who confirmed that the income and profit forecasts were fair and reasonable based on the information provided by the directors.The prospectus also included an advice from the directors of Worldwide News Ltdthat therewasnochanceofthecompanybeingunsuccessfulin its applicationofthis licence.

Worldwide New Ltd's application for the licence failed and it now appears that the company's solicitors' advice was negligent in that it failed to take into account the rules regarding foreign ownership of television broadcasting licences in Australia.

Over two million shares were issued pursuant to the prospectus offer which is still open for subscription.

(a)Who,ifanyone,facesliabilityforthestatementsintheprospectusandwhat arethe possible outcomes? Answerwith referencetothe CorporationsAct2001(Cth); (b)Whatcausesof legalactionareopento ASIC, theregulator?Answerwith reference to the Corporations Act2001(Cth).